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Strong Growth Experienced By Asia-Pacific in the Textile Mills Market
Despite continuing financial and economic uncertainty impacting the global economy, the textile mills market has experienced strong growth in 2011. This is largely due to the performance of the Asia-Pacific market. The strong growth experienced by the Asia-Pacific region during 2007-2011 has not been seen in Europe and the United States, where market values have continued to fluctuate.
The global textile mills market grew by 6.3% in 2011, to reach a value of $630.6 billion, representing a compound annual growth rate of 4.4% for the period spanning 2007-2011.
Growth was primarily driven by the Asia-Pacific and South American regions. Asia-Pacific contains the two largest textiles markets in terms of value; India and China, with a global market share of 29% and 21%, respectively. Both countries have experienced strong growth in both production and exports in the last few years.
North America and Europe felt the effects of the recent economic climate, with decline experienced in 2008 and 2009. Both markets recovered in 2011; however, market share is declining. Europe’s market share has dropped from 22% in 2007 to 19.6% in 2011. The US’s share has dropped from 14% in 2007 to 11.5% in 2011.
Historically, China was a powerhouse of textiles manufacturing and exports, due in part to low cost labor. However, China’s future position as a leader in textiles manufacturing is questionable, due to an increase in environmental and safety regulations, taxes and labor costs (wages vary region to region, but increase around 15-20% annually). This may push manufacturing to other regions, such as Southeast Asia. However, China benefits from a reliable and sophisticated supply chain, as well as high degrees of efficiency and productivity, which may see China retain its status as a leader in this industry.
The high prices of raw materials, such as silk, cotton and wool, may have a knock-on effect further down the supply chain, decreasing profit margins for companies and passing on the rising to consumers. The price of cotton rose 150% between August 2010 and March 2011. Wool has also seen a sharp rise in recent years. However, although prices have dropped since reaching a peak in 2011, prices are still high.
The geography share continues to change: both the US and Europe have experienced declining share while Asia-Pacific’s share has risen from 55% in 2007 to 60.7% in 2011.